PDN : TSX : C$1.28
BUY
Target: C$1.75
COMPANY DESCRIPTION:
Paladin Energy Ltd. is a growing mid-tier producer of uranium operating the Langer Heinrich open-pit in Namibia and the Kayelekera open-pit in Malawi.
Investment recommendation
We have updated our estimates to reflect the company’s better than expected FY Q2/13 operating results (U308 production of 2.19 million
lbs was 12.2% above our forecast). We note that record U308 production of 2.19 million lbs was up 13.6% q/q, representing 103% of the
nameplate capacity of 8.5 million lbs per annum. After badly struggling with the ramp up at both Langer Heinrich and Kayelekera, we note that
Paladin has now met or exceeded our production forecast for five consecutive quarters.
The company also reconfirmed its previously issued FY 2013 U308 production guidance of 8.0-8.5 million lbs.
Our C$1.75 target is based on 1.0x our 10% NPV estimate of C$1.76 per share. Our BUY rating is supported by the company’s attractive relative
valuation and improving uranium market sentiment.
Investment highlights
We now forecast FY 2013E – 2015E U308 production of 8.2m lbs, 8.4m lbs, and 8.4m lbs (previously 7.9m lbs, 8.4m lbs, and 8.3m lbs).
Valuation
Paladin is currently trading at a 35.8% discount to our revised 8% NPV estimate of C$1.99 per share, which compares to our uranium producer
coverage universe of a 24.2% discount.
Related articles
- Uranium Sector Update (amp2012.com)
